General

Part of Orders of the Day — Budget Proposals – in the House of Commons at 12:00 am on 17 April 1956.

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Photo of Mr Eric Johnson Mr Eric Johnson , Manchester, Blackley 12:00, 17 April 1956

I count myself very fortunate to be the first hon. Member on this side of the Committee to have the opportunity of congratulating my right hon. Friend the Chancellor of the Exchequer not only upon the lucid way in which he delivered his Budget message, but upon its contents. Indeed, the Leader of the Opposition did not seem to find a very great deal in it to criticise. I am sure that my right hon. Friend will know that I mean it as a compliment to him when I say that the lucidity of his speech was well up to the standard of his predecessor.

I have suggested before that the only way in which we can break the vicious circle of wages and prices out-pacing each other is for private industry to take the lead by holding down prices. I am glad to say that in some instances, greatly to industry's credit, that has been done, but it is not an example which has been followed as widely as we might have hoped. Indeed, I cannot feel that any great contribution to the fight against inflation has been made by the decision announced in the last few days by two companies to increase dividends and, in one case, to make an issue of bonus shares. That is all the more true in the case of one firm which is engaged in the engineering industry. It seems unwise to increase dividends when demands are being made for increased wages in the same industry.

It is equally true that not much help has been forthcoming to the Chancellor from the other side of industry. The index of weekly wage rates rose by 4 points between October last and the end of February, although the Index of Retail Prices rose by only one during that period. I do not suggest for one moment that increased wages are the only cause of the rise in the cost of living, as the Economic Survey points out, the main cause of the general rise in prices in 1954–55 was that incomes rose about twice as fast as output.

The tragedy of this state of affairs is that it is those who are not able to protect themselves by increasing their incomes through successful wage claims, or in other ways, who are hit the hardest. I have in mind the old-age pensioners, people who are living on small fixed incomes, retired people, many professional people and small businessmen, self-employed people and the disabled. I should have been glad, therefore, if we had had in the Budget some wider concessions to help those people than my right hon. Friend has found himself able to make, though in the case of the larger families the increase in family allowances will be very helpful. However, my right hon. Friend has not gone as far as I had hoped he would be able to do, although I recognise his difficulties.

I had hoped to hear something about speeding up the repayment of post-war credits. I can never accept what we are told about it being impossible to do this even in cases of hardship, because it is altogether too difficult to define. I suggest to my right hon. Friend that if his officials in the Treasury are unable to do that he should ask them to consult the officials of the National Assistance Board, who are doing that very thing every day.

I had also hoped that we might have heard of some concession to the disabled, particularly to the limbless ex-Service man. Perhaps we shall hear something in that respect later in the year. On the other hand, I was glad that my right hon. Friend referred to closing the loophole in respect of shooting brakes. He also made some observations about the investment allowance, and I thought he might have said that he would stop the initial allowance on motor cars bought for business purposes. I believe that an unnecessarily large number of motor cars are bought for that purpose, and that some sections of industry might realise that it is not only the Government who are supposed to effect economies.

As to the tax changes, it is difficult to grasp them all and to make any comment upon them so soon after my right hon. Friend has sat down. It is a task beyond my powers, at all events. However, I certainly would not disagree with his proposal to increase the tax on distributed profits, though I cannot think that it is a wise step to tax undistributed profits.

I had hoped that my right hon. Friend would seize the chance to adopt a more painless method of extracting revenue from the public, and that he would introduce further duties on betting. It will be recalled that on 9th March the House debated the Report of the Royal Commission on Betting, Lotteries and Gaming and, as a result, the Government undertook to introduce legislation as soon as practicable to rectify the chaotic state of our betting laws. I do not think it necessary to await that legislation before introducing new duties on betting. Indeed, if that were done, I believe it would be a powerful, and yet a relatively painless, method by which my right hon. Friend might fortify the Revenue. It might be less painful perhaps than the increased tax on tobacco, for instance.

Last year, the Treasury took £21 million out of the £71 million staked on football pools. It is hard to say how much was taken out of the £350 million which, it is estimated, was staked on other forms of betting such as horse and dog racing. I do not think that it could have been more than £20 million, even taking into consideration the Income Tax paid by bookmakers on their profits. At present, the Exchequer levies a duty on betting, both on the tote and through bookmaking on dog tracks. It does not do so on horse racing. I believe that that should be remedied.

Undoubtedly, the largest amount of money is staked with the off-the-course bookmaker, who pays no duty. It is estimated that the amount of money staked in that way is between £140 million and £170 million. I shall not go into details as to the possible method of obtaining revenue out of that large sum, but I would recommend my right hon. Friend to look again at the most ingenious Question put to him on 27th March by the hon. Gentleman the Member for West Ham, North (Mr. Lewis), which seemed to suggest a valuable way of getting revenue from that source.

I was glad to note what my right hon. Friend said about personal savings. Although today there are probably more people in a position to save than there were twenty years ago, because many more people have something left over after providing for the bare necessities of life, I believe that there is less inclination to save than there used to be. There are three main reasons for that. The first is that people have naturally come to expect a much higher standard of living. Today, there are attractive things to buy which people could not afford to buy years ago, so there is much more inducement to buy things one likes.

Secondly, I believe that the great advance made in schemes for essential services has, unfortunately, created a tendency in people to leave the State to take care of them in sickness or old age. Thirdly, there is little or no inducement to save when the value of money is falling, as my right hon. Friend said. To put it mildly, it is extremely irritating to buy a Savings certificate for 15s., and to receive 20s. in ten years' time, only to find that much more could have been brought with the 15s. ten years earlier. That is undoubtedly the reason why the large investor turns away from Savings bonds and from fixed interest bearing securities, and puts his money into ordinary shares, where there is some hope of increased dividends, of bonus issues and of capital appreciation. Whereas, the small potential saver goes in for the football pools.

The proposals made by my right hon. Friend will go a long way towards remedying that state of affairs. I was glad to hear what he said about Premium Bonds. I have long been an advocate of going even further, of introducing a straightforward State lottery. I know that this suggestion has not been favourably received so far. It had been my intention to draw the attention of my right hon. Friend to the fact that a recent visitor to the Soviet Union told me that, surprisingly enough, there is a system of savings there whereby the fortunate saver has the value of his savings greatly increased as the result of a draw. I am not aware whether in the Soviet Union people are able to draw out their increased savings after they have benefited in that way. However, I am glad that my right hon. Friend has introduced Premium Bonds. It is the kind of bold and imaginative suggestion such as I had hoped we would get from him.

In the past I have put forward another suggestion for savings which has not yet received a favourable reception, although it has nothing to do with gambling. The suggestion is for an Empire savings certificate. The answers that I have been given on more than one occasion was that the existing facilities were adequate, but now it appears that this is not altogether the case. I believe, therefore, that there should be some form of certificates which would be earmarked for colonial development, and that investors might be offered a choice of the various countries in which they would like their investments used. The Government frequently make loans or grants to various parts of the Colonial Empire, and it might be attractive to investors to interest themselves financially in a specific part of the Empire.

Another attractive method would be to try to make an arrangement with the Commonwealth Governments whereby the modest investor would be given opportunities to invest in small units in the development projects now going on in different parts of the Commonwealth. I have in mind particularly Canada, which is very worried about the amount of capital from the United States by comparison with that coming from this country. I think that if such a scheme was introduced and it was taken up by the Canadian Government, it would have a very wide appeal.

I have one other suggestion in regard to savings which I believe would be attractive, and that would take the form of a road loan. We are all painfully aware at the present time of the shocking state of our overcrowded roads and of the growing need for modern motorways between our great cities and the curtailment of the appalling loss of life which is taking place on the roads almost every day. It is generally admitted that if help could be given in providing these great motorways, the result would be a considerable saving in the cost of transport and in the lowering of prices.

Of course, when we suggest these things we are invariably told that they are too expensive and that we cannot afford to build roads at the present time on the scale we would wish. The truth is that we cannot afford not to build them. I do not believe that it would be difficult to devise some scheme to finance the building of roads by borrowing from the public on reasonably attractive terms. I believe that that would be effective because I think that people are more likely to save money and invest it if they are investing it for some objective which they personally approve, such as the building of roads.

I believe that many motorists, and indeed everyone concerned about the loss of life on the roads, would readily invest their money in a road loan if they knew that something definite would be achieved. That seems a more attractive way of investing one's money than putting it in Savings certificates, or whatever we may call them, when we do not know what the Government will do with the money after they have borrowed it. I think that that may be a useful suggestion.

As my right hon. Friend said, although not in so many words, this year's Economic Survey began with the words: In 1955 the world's economic conditions were highly favourable. For Britain, unhappily, I believe that 1955 was a year of wasted opportunities.